Minority Depository Institution Preservation Program, 36356-36363 [2015-15515]
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36356
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by target groups to the ETA. An
employer uses Form ETA–9061 or ETA–
9062 together with Form IRS–8850 to
request certification for new hires. A
SWA uses information from the two
forms to verify target group eligibility
and process the employer’s requests. A
SWA uses Form ETA–9063 to issue a
final certification to an eligible
employer or its representative and ETA
Form 9065 in an internal quarterly
administrative audit.
This information collection is subject
to the PRA. A Federal agency generally
cannot conduct or sponsor a collection
of information, and the public is
generally not required to respond to an
information collection, unless it is
approved by the OMB under the PRA
and displays a currently valid OMB
Control Number. In addition,
notwithstanding any other provisions of
law, no person shall generally be subject
to penalty for failing to comply with a
collection of information that does not
display a valid Control Number. See 5
CFR 1320.5(a) and 1320.6. The DOL
obtains OMB approval for this
information collection under Control
Number 1205–0371.
OMB authorization for an ICR cannot
be for more than three (3) years without
renewal, and the current approval for
this collection is scheduled to expire on
June 30, 2015. The DOL seeks to extend
PRA authorization for this information
collection for three (3) more years,
without any change to existing
requirements. The DOL notes that
existing information collection
requirements submitted to the OMB
receive a month-to-month extension
while they undergo review. For
additional substantive information
about this ICR, see the related notice
published in the Federal Register on
March 2, 2015 (80 FR 11231).
Interested parties are encouraged to
send comments to the OMB, Office of
Information and Regulatory Affairs at
the address shown in the ADDRESSES
section by July 30, 2015. In order to help
ensure appropriate consideration,
comments should mention OMB Control
Number 1205–0371. The OMB is
particularly interested in comments
that:
• Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
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• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Agency: DOL–ETA.
Title of Collection: Work Opportunity
Tax Credit and Welfare-to-Work Tax
Credit.
OMB Control Number: 1205–0371.
Affected Public: Individuals or
Households; State, Local, and Tribal
Governments; and Private Sector—
businesses or other for profits, farms,
and not-for-profit institutions.
Total Estimated Number of
Respondents: 990,052.
Total Estimated Number of
Responses: 2,420,624.
Total Estimated Annual Time Burden:
847,445 hours.
Total Estimated Annual Other Costs
Burden: $0.
Dated: June 17, 2015.
Michel Smyth,
Departmental Clearance Officer.
[FR Doc. 2015–15469 Filed 6–23–15; 8:45 am]
BILLING CODE 4510–FP–P
NATIONAL CREDIT UNION
ADMINISTRATION
RIN 3133–AE16
Minority Depository Institution
Preservation Program
National Credit Union
Administration (NCUA).
ACTION: Final Interpretive Ruling and
Policy Statement 13–1.
AGENCY:
The NCUA Board is issuing a
final Interpretive Ruling and Policy
Statement to establish a Minority
Depository Institution Preservation
Program for federally insured credit
unions.
SUMMARY:
This final Interpretive Ruling
and Policy Statement is effective July
24, 2015.
FOR FURTHER INFORMATION CONTACT:
Wendy A. Angus, Acting Director,
Office of Minority and Women
Inclusion, at (703) 518–1650; or Cynthia
Vaughn, Diversity Outreach Program
Analyst, Office of Minority and Women
Inclusion, at (703) 518–1650.
SUPPLEMENTARY INFORMATION:
DATES:
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I. Background
In 1989, Congress enacted the
Financial Institutions Reform, Recovery
and Enforcement Act (FIRREA) 1 in
response to the failure of the Federal
Savings and Loan Insurance Corporation
(FSLIC), which insured the deposits of
insolvent savings & loan institutions.
Section 308 of FIRREA established goals
for preserving and promoting minority
depository institutions.2 When enacted,
FIRREA § 308 applied only to the Office
of Thrift Supervision (OTS) and Federal
Deposit Insurance Corporation (FDIC),
successor to FSLIC.3 Those agencies
developed various initiatives, such as
training, technical assistance and
educational programs, aimed at
preserving federally insured banks and
savings institutions that meet FIRREA’s
definition of a minority depository
institution (MDI).4
In 2010, Congress enacted the Dodd
Frank Wall Street Reform and Consumer
Protection Act (Dodd Frank Act).5
Section 367(4)(A) of the Dodd Frank Act
amended FIRREA § 308 to require the
National Credit Union Administration
(NCUA), the Office of the Comptroller of
the Currency (OCC) and the Board of
Governors of the Federal Reserve
System (Fed) to take steps to preserve
existing MDIs and encourage the
establishment of new ones.6 In addition,
Dodd Frank Act § 367(4)(B) requires
these agencies, along with FDIC, to each
submit an annual report to Congress
describing actions it has taken to carry
out FIRREA § 308.7
In 2013, the NCUA Board proposed an
Interpretive Ruling and Policy
Statement 13–1 (proposed IRPS) to
establish a Minority Depository
Institution Preservation Program
(Program) to encourage the preservation
of MDIs.8 As proposed, the MDI
program would be administered by
NCUA’s Office of Minority and Women
Inclusion (OMWI) and would consist of
outreach efforts, various forms of
technical assistance and educational
opportunities to benefit eligible credit
unions.
1 Public
Law 101–73, 103 Stat. 183 (Aug. 9, 1989).
Title III, § 308, 103 Stat. 353 note re
‘‘Preserving Minority Ownership of Minority
Financial Institutions,’’ 12 U.S.C. 1463 note.
3 Id. § 1463 note (a). OCC and the Fed also
initiated MDI programs to comply with the spirit of
FIRREA § 308, even though neither was originally
required to do so. OTS became part of OCC on July
21, 2011. OCC now administers the OTS MDI
Program.
4 12 U.S.C. 1463 note (b).
5 Public Law 111–203, 124 Stat. 1376 (July 21,
2010); 12 U.S.C. 5301 et seq.
6 12 U.S.C. 1463 note (a).
7 Id. § 1463 note (c).
8 78 FR 46374 (July 31, 2013).
2 Id.
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NCUA received a total of nine
comments on the proposed IRPS—eight
from credit union trade associations and
one from a community advocacy group.
Seven commenters expressly supported
the proposal; none opposed it.
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II. Summary of Comments on Proposed
IRPS
1. ‘‘Minority Depository Institution’’
Definition
Three commenters recommended
defining MDIs by minority
representation solely among current or
potential members, without considering
minority representation among credit
union management officials. Two
commenters believe extending the
definition beyond minority
representation among the membership
would exceed the statutory mandate,
and questioned whether including
management officials within the scope
of minority representation is necessary
or would undermine the Program’s
goals. Another commenter opposed
extending the minority representation
requirement to management officials,
contending that, if it were to encompass
credit union staff, it would be
burdensome for nearly one-half of the
nation’s federally insured credit unions
that operate with five or fewer
employees. This commenter also
opposed requiring minority
representation among members of the
board of directors, supervisory and
credit committee members because they
are volunteers elected from and by the
membership, and who should have the
education, experience, and knowledge
to manage a credit union regardless of
minority status.
In contrast, a commenter applauded
NCUA for measuring minority
representation among these officials to
ensure that credit union leadership
reflects the diversity of the communities
and members an MDI serves. In
addition, the same commenter wanted
to limit the MDI definition to current
members only, contending that having
potential members who reside in an area
having a mostly minority population is
no assurance that an MDI would
actually serve and invest in consumers
of color within that community. Finally,
the commenter suggested that minority
representation should also encompass
persons that identify as multi-racial/
multi-ethnic, estimated at 9 million
Americans by the U.S. Census Bureau.
In the final Interpretive Ruling and
Policy Statement 13–1 (final IRPS), the
NCUA Board retains the proposed MDI
definition with three significant
modifications to ensure complete
conformity with the statutory MDI
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definition of a mutual institution. Under
that definition, a credit union qualifies
as an MDI when ‘‘the majority of the
Board of Directors, account holders, and
the community which it services is
predominantly minority.’’ 9 (Hereinafter,
when minority representation is
required to be ‘‘predominant’’ or to
consist of a ‘‘majority,’’ i.e., greater than
50 percent in either case, it will be
referred to as ‘‘>50%’’).
First, the proposed MDI definition
combined both current and ‘‘eligible
potential’’ credit union members to
assess minority representation among a
credit union’s ‘‘account holders.’’
Recognizing that a potential member
does not hold a credit union account
nor enjoy the rights and benefits of
membership, the final IRPS limits to
current members the assessment of
>50% minority representation among
credit union ‘‘account holders.’’
Second, as several commenters
contended, the proposed MDI definition
assessed minority representation not
only among a credit union’s board of
directors (BOD) as required, but more
generally among its ‘‘current
management officials,’’ consisting of
members of the supervisory and credit
committees and of the senior executive
staff.10 Despite the NCUA Board’s wish
to emphasize the importance of
minority representation within the
leadership ranks of MDIs, the final IRPS
limits to the BOD exclusively the
assessment of >50% minority
representation, consistent with the letter
of the applicable statutory definition.
Third, the final IRPS clarifies that the
MDI criterion requiring the community
of a would-be MDI to be
‘‘predominantly minority’’ is not an
alternative criterion for credit unions
unable to meet the MDI criteria
requiring >50% minority representation
within its membership and on its BOD;
it is an additional MDI criterion in and
of itself.11 To assess whether the
community of a would-be MDI is
‘‘predominantly minority,’’ the final
9 12
U.S.C. 1463 note (b)(1)(C).
Chief executive officer, assistant chief
executive officer, chief financial officer and branch
managers. 78 FR 46374, 46375 (July 31, 2013)
11 12 U.S.C. 1463 note (b)(1)(C). In contrast to
NCUA, the fact that FDIC oversees publicly-owned,
privately-owned and mutual institutions may
account for its policy permitting an institution that
is unable to meet the 51 percent minority
ownership criterion to instead rely on two of the
mutual MDI >50% criteria, yielding a hybrid
definition: ‘‘In addition to the institutions that meet
the [51 percent] ownership test, for purposes of this
Policy Statement, institutions will be considered
[MDIs] if a majority of the [BOD] is minority and
the community that the institution serves is
predominantly minority.’’ 67 FR 18 618, 18620
(April 16, 2002). See also 67 FR 77, 79 (January 2,
2002).
10 E.g.,
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IRPS designates a credit union’s
community according to its charter. To
make this assessment, the final IRPS
also permits credit unions to rely on the
same methods and supporting data the
proposed IRPS prescribed for use by
credit unions to self-certify as an MDI
(e.g., U.S. Census and Home Mortgage
Disclosure Act data).12
In addition to the above
modifications, the MDI definition in the
final IRPS counts a person of multiple
ethnicities who falls into at least one of
the four minority categories designated
by law,13 (or is multi-racial as defined
in Table 1) as a single minority
individual for purposes of minority
representation.
2. Documentation To Support MDI
Designation
In order to receive the MDI
designation, one commenter advocated
requiring the majority of a credit union’s
members’ deposits and/or loan products
to be held by racial minorities. While
striving to maximize flexibility and the
options to determine and support an
MDI designation, the NCUA Board is
concerned that it would be too
burdensome and restrictive to identify
the race and/or ethnicity of all members
with deposits and/or loan products. The
final IRPS therefore does not adopt this
suggestion as an MDI criterion.
One commenter recommended that
NCUA clarify which U.S. Census
demographic data to rely upon to
measure minority representation among
members for purposes of MDI
determination. The final IRPS clarifies
that U.S. Census data includes the
American Fact Finder’s most recent
census population data (e.g., 2010) for a
particular geographic area, such as
within members’ zip codes or census
tracts; and that minority composition 14
by census tracts, according to U.S.
Census population data, can be found
on the U.S. Census Bureau and the
Federal Financial Institutions
Examination Council (FFIEC) Web sites.
One commenter suggested providing a
portal on NCUA’s Web site for credit
unions to access the sources of data
relevant to self-certifying as an MDI,
12 78 FR at 46376 and n. 14. In many cases the
methods and data that establish >50% minority
representation among a credit union’s membership
also will establish >50% minority representation
within the community it services. The Board
acknowledges this redundancy as necessary to
conform this third criterion to the letter of the
statutory MDI definition.
13 12 U.S.C. 1463 note (b)(2).
14 The minority composition represents the
percentage of minorities divided by the entire
referred population (e.g., total membership or
within a geographic area such as a census tract or
a Metropolitan Statistical Area).
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such as links to U.S. Census and Home
Mortgage Disclosure Act (HMDA) data.
NCUA currently provides links to access
U.S. Census and FFIEC data on OMWI’s
Web page. To identify the ethnicity of
its mortgage applicants, a credit union
may rely on the home mortgage data it
submits to comply with HMDA.
One commenter opposed the notion of
collecting data by any method that relies
on members voluntarily identifying
themselves as a minority, for two
reasons. First, the practice may conflict
with anti-discrimination laws; and
second, maintaining the collected
ethnicity data may expose credit unions
to criticism that the practice is intrusive,
and to the risk of legal action. The final
IRPS permits collection of volunteered
ethnicity data as an option, but not a
requirement, for credit unions to
determine and to support selfcertification of MDI eligibility.
Organizations that already collect
volunteered ethnicity data from
customers and members must take care
to maintain the confidentiality of the
collected data. Credit unions that elect
this option to support self-certification
should maintain the collected data
separately from members’ personal
account files, and without personal
identifiers (e.g., name, account or social
security number, etc.).
One commenter disagreed with the
proposed requirement to annually
review and update credit unions’ MDI
status, suggesting that NCUA require
credit unions to follow a data review
schedule that is consistent with the data
each credit union relied upon to
document its MDI certification. For
example, when MDI eligibility is based
on U.S. Census population data, the
review and update would occur every
10 years. Due to frequent changes in a
credit union’s field of membership, and
the composition of its board of directors
due to annual elections, the final IRPS
retains an annual schedule for the
review and update of MDI selfcertifications.
3. MDI Program Costs, Resources &
Funding
Three commenters asked NCUA to
perform a cost/benefit analysis of the
new Program, detailing the new
resources or processes that will be
essential to realize NCUA’s commitment
to preserve MDIs, and how the Program
will be funded. Another commenter
sought further explanation of Program
mechanics, funding details, the number
of staff dedicated to Program
implementation, the geographic
distribution of Program beneficiaries,
and the frequency of OMWI staff
interaction with participating MDIs.
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The NCUA Board anticipates no
additional costs or new resources
attributable to the Program, due to
reliance on existing agency programs
and resources offered through NCUA’s
Office of Small Credit Union Initiatives
(OSCUI), regional offices, and Office of
Consumer Protection (OCP), thus
avoiding overlaps with existing
supervision, chartering, training,
technical assistance, and educational
programs. About 92 percent of MDIs
already are eligible for OSCUI services
that assist and educate credit unions
designated either as low-income or as
small. Examiners provide additional
guidance to MDIs in between
examinations to assist them in resolving
substantial examination or viability
concerns. OCP provides guidance to
assist and educate MDIs and interested
minority groups in chartering and in
field of membership expansions. One
OMWI staff member is responsible for
managing the Program. OMWI’s initial
interaction and communications with
MDIs will include OMWI’s participation
at events attended by MDIs, and
OMWI’s assistance provided upon
request from MDIs.
4. MDI Program Benefits
One commenter favored an expansion
of financial support to enable the
Program to provide direct financial
support to MDIs. Financial support to
eligible MDIs will be offered through the
existing grant and loan programs funded
by NCUA’s Community Development
Revolving Loan Fund (CDRLF).
Two commenters encouraged NCUA
to provide technical assistance to MDIs
to avoid insolvency. One suggested two
ways to strengthen the net worth of
MDIs in response to unusual losses
related to economic conditions outside
the credit union’s control: (1) Develop
criteria and goals for access to assistance
under section 208 of the Federal Credit
Union Act (§ 208 assistance); 15 and (2)
make CDRLF funding a source of
secondary capital for low-income
designated credit unions, especially
MDIs.
The NCUA Board emphasizes that the
agency’s role in preserving MDIs and
providing technical support not only is
to help MDIs survive, but to help them
thrive as ongoing concerns. Section 208
assistance is available to all credit
unions under at least one of three
conditions: (1) To assist in the voluntary
liquidation of a solvent credit union; (2)
to avert the liquidation of a credit union
that NCUA determines is in danger of
insolvency; or (3) when NCUA
15 12 U.S.C. 1788(a). See also 12 U.S.C.
1790d(o)(2)(B).
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determines it is needed to reduce the
risk, or avert the threat, of a loss to the
National Credit Union Share Insurance
Fund.16
NCUA typically provides § 208
assistance to facilitate a sound merger or
consolidation of an insured credit union
in order to avert the liquidation of a
credit union. Other than to avert the
liquidation of a credit union that NCUA
determines on a case-by-case basis is in
danger of insolvency, regardless
whether it is an MDI, § 208 assistance is
not used solely to improve a credit
union’s capital position. The NCUA
Board reserves the use of § 208
assistance for credit unions under the
above three conditions. However, the
agency plans to enhance its guidance to
examiners to sensitize them about the
availability of § 208 assistance for MDIs,
as well as about the ‘‘General Preference
Guidelines’’ for mergers, addressed
below. In contrast, the purpose of
CDRLF grants and loans is to support
enhanced service to underserved
communities, including those served by
MDIs. Unlike § 208 assistance, CDRLF
grants and loans generally are not
provided solely for the purpose of
improving capital to avoid insolvency.
One commenter suggested making
technical assistance and educational
programs available on a variety of topics
critical to preserving MDIs, including
aid in achieving satisfactory levels of
operations and regulatory performance.
OSCUI currently provides technical
guidance and educational programs to
assist MDIs, as well as small credit
unions, in achieving these objectives
regardless of low-income designation
and asset size. These programs include
NCUA-sponsored videos, webinars,
consulting services, newsletters, and
other publications, including a Credit
Union Leadership Resource Manual.
One commenter advocated adopting a
plan that combines targeted resources
with supervisory authority in an effort
to resolve material safety and soundness
concerns among troubled MDIs. NCUA
has no plans to make MDI preservation
a part of the examination and/or
supervision processes, although
examiners are encouraged to provide
additional guidance to MDIs in
resolving material safety and soundness
concerns whenever feasible. Also,
OSCUI will continue to provide MDIs
with technical assistance and
educational and consulting services to
assist them in resolving these concerns,
thus improving their viability. OMWI
will aid MDIs by facilitating and
monitoring the assistance they receive,
will report to Congress annually on
16 12
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U.S.C. 1788(a)(1)–(2).
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these efforts to preserve MDIs and to
create new MDIs, and will reevaluate
and enhance the Program as it matures.
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5. MDI Program Partnerships
Two commenters suggested
collaborating with interested
stakeholders (e.g., trade associations) to
increase the likelihood of preserving
MDIs, as well as to participate with
NCUA’s OMWI as a resource partner.
One of the two commenters advocated
expanding the Program’s outreach to
include a webinar on the application
process for would-be MDIs, workshop
sessions at trade conferences, and a
comprehensive marketing program to
increase awareness. NCUA’s Office of
Consumer Protection (OCP) recently
published the Federal Credit Union
Charter Application Guide, which
provides detailed step-by-step
instructions for chartering a new federal
credit union. Additionally, NCUA is
building relationships and plans to
collaborate with credit union trade
associations, credit unions, and other
organizations to provide mentoring and
educational opportunities for MDIs,
including workshops and webinars.
Interested organizations and credit
unions should contact OMWI and
suggest ideas for possible partnerships.
One commenter encouraged NCUA’s
OMWI to collaborate with the original
FIRREA-designated agencies, and the
two agencies that joined them, to
implement their ideas and suggestions.
To develop and enhance NCUA’s
Program, OMWI continues to consult
with its counterparts at the FDIC, the
OCC and the Fed, to review their MDI
programs, and to attend their
interagency MDI and Community
Development Financial Institution
Banks’ Conferences. NCUA will
continue to work with its counterparts,
whenever feasible, to obtain additional
ideas to enhance its Program.
6. General Preference Guidelines for
MDI Mergers
One commenter supported the
FIRREA-prescribed ‘‘General Preference
Guidelines’’ for mergers (Guidelines),17
which give MDIs preference as a merger
partner, provided that other relevant
factors are given appropriate weight and
consideration (e.g., the acquiring MDI’s
capacity to offer the same and/or
improved financial services and access
to the acquired members).
To implement the Program, another
commenter encouraged NCUA to work
closely with state regulators to apply the
Guidelines seamlessly and fairly when
comparing potential MDI versus non17 12
U.S.C. 1463 note (a)(2).
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MDI merger partners for a troubled
state-chartered credit union; to make the
Program respond expeditiously and
effectively to a troubled institution; and
to ensure that supervisory oversight
remains the focus of the Program—all
without delaying the resolution of a
troubled institution through merger or
acquisition.
Under the final IRPS, NCUA regional
offices will continue to process the
mergers of troubled MDIs, working
closely with state regulators to apply the
Guidelines, and to ensure that the
Guidelines do not conflict with safety
and soundness considerations. In
processing MDI mergers and purchaseand-assumption transactions, the need
to respond expeditiously and effectively
to troubled MDIs will continue to be the
primary focus of NCUA’s supervisory
oversight. The Guidelines provide
interested MDIs an opportunity to
participate in the merger bidding
process for an insolvent or troubled
MDI, enabling the minority character of
the MDI to be preserved.
7. Attention to Troubled MDIs
One commenter recommended
establishing a clear supervisory
framework and strategy to establish a
sufficient period of time to permit a
more aggressive workout strategy for
troubled MDIs. The commenter
contended that such a framework and
strategy would be an important
preservation step between the
identification of a troubled credit union
and its dissolution. The commenter
suggested addressing steps that may be
taken through NCUA’s supervisory
examinations and oversight; and
recommending an aggressive strategy for
intervention using supervisory
authorities combined with its targeted
workout teams and resources.
In addition, this commenter
advocated adopting a system of triage
for prioritizing attention to MDIs, based
on financial health, to best support
those that are financially sound in
building and expanding their work,
while intervening sooner with those on
a less secure footing in order to preserve
service to their communities.
Furthermore, this commenter advocated
adopting a plan to provide resources
and support to struggling MDIs
identified as in danger of failing either
through agency enforcement action or
an inability to address issues identified
in a Document of Resolution (DOR) and/
or Letter of Understanding and
Agreement (LUA). The period between
a DOR and an LUA may present a
critical moment where additional help
and support can be sought. This
commenter suggested steps NCUA could
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36359
implement to work an MDI out of
distress or troubled status. The
commenter suggested using NCUA’s
Vendor Registration process to identify
an appropriate resource team to
participate in workout situations and to
put additional resources and technical
assistance at its disposal in working to
resolve sound operations in a troubled
MDI. The commenter envisioned the
resource team effecting a significant
turnaround in 6–12 months with the
intention of preserving and building the
institution. If the situation is not viable,
the commenter suggested the resource
team would be able to assist in
identifying appropriate merger partners
interested in serving the minority
community.
NCUA cannot adopt the commenter’s
suggestions regarding attention to
troubled MDIs because they would
involve internal agency processes
beyond the scope of this final IRPS. The
final IPRS is a policy statement that
generally prescribes actions to preserve
MDIs, such as technical assistance,
training, and educational opportunities
to strengthen management and/or
operations, as well as to assist in
resolving examination and compliance
concerns. The Program will not interfere
with supervisory enforcement actions
duly undertaken by the other offices
within the agency.
Also, due to confidentiality, NCUA
cannot disclose information about
troubled MDIs to resource teams
involving third parties (e.g., trade
associations or vendors). Credit union
examination results constitute
confidential information; public
disclosure is prohibited by law. NCUA
regulations specifically prohibit the
release of such information by officers,
employees or agents of NCUA or any
federally insured credit union.18 Such
disclosure risks harming the financial
stability of credit unions or interfering
in the relationship between NCUA and
credit unions.
The final IRPS addresses the posting
of a list of MDIs on the agency’s Web
site (www.ncua.gov) and the use of a
Vendor Registration Form to provide an
opportunity for qualified minorities or
minority-owned firms to apply for the
position of interim manager of an MDI
placed in conservatorship. Other uses of
the form may be considered. With the
posting of an MDI list on the agency
Web site, interested parties (e.g., trade
associations or vendors) may monitor
the financial trends of all MDIs to
identify troubled MDIs and offer a
program to restore them to financial
soundness.
18 12
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8. Commenters’ Other Suggestions
Rather than holding to a static number
of MDIs to measure preservation, one
commenter advocated chartering new
MDIs in communities that would benefit
from MDI service. NCUA’s goals are to
implement efforts not only to preserve
existing MDIs, but to encourage the
chartering of new MDIs, as FIRREA
§ 308(a) (1)–(5) prescribes.19 NCUA’s
OCP and OSCUI will continue to work
with groups seeking to charter new
MDIs and with MDIs seeking a common
bond conversion or a charter expansion,
and they will assist them in the
application process.
One commenter advocated
publicizing information to credit
unions, leagues and state agencies about
NCUA’s efforts to preserve MDIs and
about the Program’s benefits.
Information pertaining to MDI
preservation efforts is provided in
NCUA’s annual reports to Congress.20
NCUA’s MDI Reports to Congress for
2013 and 2014 are available on OMWI’s
Web page.21
Another commenter suggested
limiting the regulatory burden on credit
unions as a step in support of the
survival of MDIs. The NCUA Board
agrees with this recommendation, and is
aggressively working toward this goal.
In January 2013, the NCUA Board
reviewed the threshold it uses to
identify which credit unions qualify as
small entities and thus receive special
consideration regarding regulatory
burden and alternatives under the
Regulatory Flexibility Act (‘‘RFA’’).22
Based on industry percentages carried
forward from the last update in 2003,
and corresponding risks to the Share
Insurance Fund, the NCUA Board
determined that credit unions with less
than $50 million in assets, up from the
prior $10 million threshold, were small
and non-complex for purposes of the
RFA.23 These credit unions receive
exemptions from certain NCUA rules,
and heightened consideration of
regulatory burden. Approximately 82
percent of the 655 self-identified MDIs
under the proposed definition had
assets of less than $50 million as of
March 31, 2015. In February of 2015, the
NCUA Board proposed increasing the
19 12
U.S.C. 1463 note (a)(1)–(5).
§ 1463 note (c).
21 Available at: https://www.ncua.gov/Legal/
RptsPlans/Pages/OMWI.aspx.
22 5 U.S.C. 601.
23 78 FR 4032 (January 18, 2013).
asset threshold to define small credit
unions under the RFA to $100 million.24
The proposed rule is intended to
provide regulatory relief for a greater
percentage of credit unions (including
MDIs) in future rulemakings.
Approximately 89 percent of the 655
self-identified MDIs under the proposed
definition had assets of less than $100
million as of March 31, 2015.
One commenter proposed that NCUA
establish an advisory committee to
assist in developing, designing, and
testing strategies and approaches on
how to best preserve MDIs. Rather than
rely on a permanent advisory
committee, NCUA may consider
informal focus groups comprised of
MDIs of all asset sizes and levels of
complexity to accomplish the suggested
goals.
Revised as explained above, the final
IRPS follows.
III. Final Interpretive Ruling and Policy
Statement 13–1 (Final IRPS)
1. Why is the NCUA Board issuing this
final IRPS?
The NCUA Board is issuing this final
IRPS to establish a Minority Depository
Institution Preservation Program
(Program) to achieve the goals of
preserving and encouraging Minority
Depository Institutions (MDIs), as
section 308 of the Financial Institutions
Reform, Recovery and Enforcement Act
(FIRREA § 308) directs.25 Recognizing
the important role of MDIs in minority
communities, the NCUA Board
envisions a program of proactive steps
and outreach efforts to promote and
preserve minority ownership in the
credit union system. To achieve these
goals, the final IRPS prescribes the
Program eligibility criteria and Program
elements.
2. What are the goals and objectives of
the MDI Program?
The Program embraces goals and
objectives that relate to NCUA’s mission
and goal to ensure a safe, sound, and
sustainable credit union system as
envisioned in NCUA’s current strategic
plan.
The Program also reflects the
preservation goals of FIRREA § 308,26
namely:
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20 Id.
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24 80
FR 11954 (March 15, 2015).
Law 101–73, 103 Stat. 183 (Aug. 9,
25 Public
1989).
26 12 U.S.C. 1463 note (a) & (c).
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• To preserve the present number of
MDIs;
• To preserve the minority character
of MDIs that are involuntarily merged,
or are acquired, by following the
prescribed ‘‘general preference
guidelines’’ to identify a merger or
acquisition partner; 27
• To provide technical assistance to
prevent insolvency of MDIs that are not
now insolvent;
• To promote and encourage the
creation of new MDIs; and
• To provide for training, technical
assistance, and educational programs.
3. Who is eligible to participate in the
MDI Program?
A credit union that meets the
definition of an MDI is eligible to
participate in the Program. The Program
adopts the MDI definition set forth in
FIRREA § 308 that applies to a mutual
institution.28 Accordingly, this final
IRPS defines an MDI as a federally
insured credit union in which a
majority of its current members, a
majority of its board of directors (BOD),
and a majority of the community it
services, as designated in its charter,
falls within any of the eligible minority
groups described below. (Hereinafter,
when minority representation is
required to be ‘‘predominant’’ or to
consist of a ‘‘majority,’’ i.e., greater than
50 percent in either case, it will be
referred to as ‘‘>50%’’.)
NCUA relies on FIRREA § 308’s
‘‘minority’’ definition to identify an
eligible minority exclusively as any
Black American, Asian American,
Hispanic American, or Native
American.29 Also, for the purpose of
minority representation under the MDI
definition, anyone of multiple
ethnicities who falls into more than one
of the minority categories depicted
below is a single minority individual.
27 In priority, the General Preference Guidelines
for identifying an involuntary merger/acquisition
partner are: (a) Same type of MDI in the same city;
(b) Same type of MDI in the same state; (c) Same
type of MDI nationwide; (d) Any type of MDI in the
same city; (e) Any type of MDI in the same state;
(f) Any type of MDI nationwide; and (g) Any other
bidders (for merger/acquisition partners). 12 U.S.C.
1463 note (a)(2). Rules concerning field of
membership, least cost to NCUSIF, and safety and
soundness still apply to all mergers. Regional office
staff will continue to process mergers and work
with management and state regulators. OMWI will
monitor MDI mergers and report about them to
Congress annually.
28 12 U.S.C. 1463 note (b)(1)(C).
29 Id. § 1463 note (b)(2). Compare 12 U.S.C.
5452(g)(3) incorporating 12 U.S.C. 1811 note(c)(3).
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36361
TABLE 1—MINORITY CATEGORY DEFINITIONS
Minority category
Equal Employment Opportunity Commission
(EEOC)
Black American ...........................
Black or African American (Not Hispanic or Latino)—A person having origins in any of the black racial groups
of Africa.
American Indian or Alaska Native (Not Hispanic or Latino)—A person having origins in any of the original
peoples of North and South America (including Central America), and who maintain tribal affiliation or community attachment.
Hispanic or Latino—A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish
culture or origin regardless of race.
Asian (Not Hispanic or Latino)—A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent, including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam; or
Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino)—A person having origins in any of the
peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
Two or More Races 30 (Not Hispanic or Latino)—A person who identifies with more than one of the above
races.
Native American ..........................
Hispanic American ......................
Asian American ...........................
Multi-Racial American .................
4. How will the MDI Program function?
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NCUA’s Office of Minority and
Women Inclusion (OMWI) administers
the Program. A federally insured credit
union can self-certify as an MDI by
affirmatively answering the following
questions within NCUA’s Credit Union
Online Profile (CU Online System),
accessible from the NCUA Web site,31 or
when submitting a Call Report: (1) Are
more than 50 percent of your credit
union’s current and eligible potential
members Black American, Native
American, Hispanic American or Asian
American?; 32 and (2) Is more than 50
percent of your credit union’s current
board of directors Black American,
Native American, Hispanic American or
Asian American?
If both questions are answered ‘‘yes’’,
the credit union may self-certify via
NCUA’s Credit Union Online Profile
system that it meets the >50% minority
criteria, as the case may be. A credit
union defined as a small entity under
the Regulatory Flexibility Act (RFA)
may self-certify >50% representation
among its current members, and within
the community it services (current and
potential members combined), based
solely on knowledge of those members.
A credit union not defined as a small
entity under the RFA may rely on one
of the following methods, as applicable,
to determine the minority composition
30 U.S. Equal Employment Opportunity
Commission’s EEO–1 Report-Race/Ethnicity
Categories.
31 www.ncua.gov.
32 The community serviced by a multiple
common bond credit union consists of both its
current members and the eligible non-members
within the select groups designated by its charter.
For example, the current members and eligible nonmembers may all reside in one city, county, or
MSA. The community serviced by a community
credit union consists of both its current members
and the eligible non-members who reside within
the well-defined local community designated by its
charter.
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of its current membership exclusively,
and of the community it services,
consisting of the combined current and
potential membership:
(A) Ascertain the minority
representation using demographic data
from the U.S. Census Bureau (using the
U.S. Census Bureau or FFIEC Web site)
based on the area(s) where the
combined current and potential
membership resides, such as a
township, borough, city, county, or
Metropolitan Statistical Area (MSA). If
the U.S. Census data (e.g., census tracts,
zip codes, townships, boroughs, cities,
counties, etc.) shows that the area’s
population is comprised mostly of
eligible minorities, the credit union may
assume that its current membership and
the community it services both have the
same minority composition as the U.S.
Census data indicates.
(B) Use Home Mortgage Disclosure
Act (HMDA) data to calculate the
reported number of minority mortgage
applicants divided by the total number
of mortgage applicants within the credit
union’s membership. HMDA data can be
obtained from the FFIEC Web site. If the
share of minority representation among
applicants is >50%, the minority
membership and the predominantly
community criteria may be met. If a
credit union grants a majority of its
mortgage loans to minorities, it is most
likely the majority of the community the
credit union services (its current and
potential members) will consist of
minorities.
(C) Elect to collect data from members
who voluntarily choose to self-identify
as an eligible minority and use the data
to determine minority representation
among the credit union’s membership.
The credit union may wish to consider
using an unbiased third party to
conduct such a collection process. For
example, data can be collected through
a survey of members assessing the
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services they desire, or by mailed
electoral ballots for official positions.
Once collected, it is essential to
maintain the confidentiality of the data;
it should not be retained in the
members’ file or with any personal
identifiers (e.g., name, account or social
security numbers, etc.) If a majority of
its current members are minorities, it is
most likely the majority of the
community the credit union services (its
current and potential members) will
consist of minorities.
(D) Use any other reasonable form of
data, such as membership address list
analyses, or an employer’s demographic
analysis of employees.
A credit union defined as a small
entity under the RFA that self-identifies
as an MDI should maintain some form
of the documentation that it relied upon
to determine that, as explained above, it
meets the minimum minority
representation among its membership.
This documentation may consist of
demographic data obtained from the
U.S. Census Bureau,33 from a credit
union’s HMDA report, or from any other
reasonable source and form of data (e.g.,
member survey, sponsor’s employee
demographic or members’ zip code
analysis).
Regardless of asset size and the
method a credit union uses to selfcertify as an MDI, the validity of the
self-certification (and the supporting
data) is subject to verification by NCUA
based on minority representation where
the credit union’s members reside.
If NCUA questions a credit union’s
certification or the data supporting it
(e.g., members’ addresses) is found to be
at odds with a credit union’s selfcertification of >50% minority
representation among either its current
membership, the community it services
(consisting of current and potential
33 www.census.gov
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members) or its board of directors,
NCUA’s OWMI will:
(1) Notify the credit union in writing
about its reasons for invalidating the
certification.
(2) Provide the credit union an
opportunity to submit documentation
and/or a rationale to support its MDI
self-identification within 60 days of
receiving OMWI’s notification.
(3) Review the documentation and/or
rationale the credit union submits and
inform the credit union whether, as a
result, it meets the >50% minority
criterion.
(4) Deny the MDI designation if the
credit union either provides no
documentation and/or rationale, or
provides documentation and/or
rationale that, in NCUA’s discretion, is
insufficient to support a certification
based upon >50% minority
representation under all criteria.
NCUA will periodically review and
determine whether an MDI continues to
meet the MDI definition. A credit union
may no longer meet the MDI definition
as a result of FOM expansions (e.g.,
mergers, purchase and assumptions,
new groups added to the FOM, or
charter conversions) and changes
resulting from board of directors
elections. NCUA, at its discretion, may
continue to treat a credit union as an
MDI under this final IRPS in the event
its board of directors no longer meets
the minority criteria, provided there is
>50% minority representation among
both the credit union’s current members
and the community it serves.
Once it qualifies as an MDI, a credit
union should annually assess whether it
continues to meet the MDI definition
(e.g., December 31st Call Report cycle),
and update its status on NCUA’s Credit
Union Online Profile system as
necessary.
Participation in the MDI Program is
voluntary. An MDI may discontinue its
participation at any time by updating its
status on NCUA’s Credit Union Online
system. In that event, the credit union
would no longer be eligible to
participate in any MDI Program
initiatives (e.g., MDI merger/acquisition
preference consideration or MDI
partnerships).
tkelley on DSK3SPTVN1PROD with NOTICES
5. What are the elements of the MDI
Program?
NCUA seeks to provide MDI Program
participants a variety of initiatives to
assist in preserving the economic
viability of their institutions. The
initiatives include technical assistance
and educational opportunities for MDIs
through NCUA’s Office of Small Credit
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16:43 Jun 23, 2015
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Union Initiatives (OSCUI).34 This
technical assistance may include
participation in:
(1) OSCUI’s Consulting Program;
(2) NCUA-sponsored training,
webinars, etc.; and
(3) Grant or loan programs of NCUA’s
Community Development Revolving
Loan Fund (CDRLF).
The technical assistance may also
include examiner guidance in resolving
examination concerns; in locating new
sponsors, mentors, or merger partners;
in expanding the field of membership;
and in setting up new programs and
services. Additionally, the NCUA Board
will consider providing Section 208
assistance to avert the liquidation of a
credit union that it determines on a
case-by-case basis is in danger of
insolvency, regardless whether the
credit union is an MDI.35
NCUA may aid in coordinating
partnerships between MDIs and other
organizations (e.g., other MDIs, and/or
trade associations) as a means of
providing technical or operational
assistance to MDIs. This assistance may
include training for officials and staff,
expertise in technical areas (e.g.,
marketing, FOM expansion guidance,
bidding on merger proposals),
equipment, and assistance for specific
projects or to achieve specific goals.
NCUA will publish a list of federally
insured MDIs on its Web site
(www.ncua.gov) to enable organizations
(e.g., banks, other MDIs, trade
associations or other third parties) to
identify MDIs that would benefit from
partnering, mentoring, additional
resources, and/or business
relationships. Banks can obtain
Community Reinvestment Act (CRA)
credit for investing in MDIs. For
example, if a bank were to have an
unused building, the bank could lease
that space to an MDI at no charge or at
a low cost, and receive a corresponding
CRA credit.
NCUA will monitor MDIs and will
report to Congress annually on the
number and overall financial condition
of MDIs, along with actions taken by the
agency to preserve and strengthen them
and to encourage the chartering of new
ones.
NCUA will use FIRREA’s prescribed
General Preference Guidelines (see
§ II.6. above) to attempt to preserve the
34 OSCUI’s services are generally offered to credit
unions that have less than $50 million in assets or
are low-income designated. By statute, grants and
loans from the CDRLF are available only to lowincome designated credit unions. The webinars and
training programs are open to all credit unions. The
MDI Program expands consulting services to all
MDIs.
35 12 U.S.C. 1788(a)(1)–(2).
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minority character of failing MDIs that
are involuntarily merged or acquired. In
the event of an involuntary merger/
acquisition of a troubled MDI,36 NCUA
will invite bids from MDIs that are
qualified to partner with a failing MDI,
along with non-MDI credit unions.
OMWI also will assist in locating an
MDI partner for MDIs wishing to
voluntarily merge their operations. To
be considered as an acquirer, an MDI is
strongly encouraged to document its
desire to acquire another MDI by
registering itself on NCUA’s Merger
Registry via the CU Online System.
Additionally, any organization or
person seeking to be a candidate for
managing the conservatorship of an MDI
should complete an NCUA Vendor
Registration Form (NCUA 1772) 37 and
OSCUI’s Credit Union Service Provider
(CUSP) Database Registration Form.38
OMWI can provide NCUA regional
offices with a list of diverse candidates
who have requested consideration for
the position of interim Chief Executive
Officer/Manager of a conserved MDI,
upon request.
Finally, the Office of Consumer
Protection and OSCUI will be available
to provide assistance, and guidance in
the application process, to groups that
may be interested in chartering a new
MDI, and to MDIs wishing to apply to
change their charter or field of
membership. For detailed step-by-step
instructions on chartering a federal
credit union, please refer to the Federal
Credit Union Charter Application
Guide.39
IV. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires NCUA to prepare an analysis to
describe any significant economic
impact the IRPS may have on a
substantial number of small entities.
36 A merger is involuntary whenever the credit
union is insolvent. 12 U.S.C. 1787(a) (1). A credit
union is insolvent when the total amount of the
credit union’s shares exceeds the present cash value
of its assets after providing for liabilities unless: (i)
It is determined by the NCUA Board that the facts
that caused the deficient share-asset ratio no longer
exist; and (ii) The likelihood of further depreciation
of the share asset ratio is not probable; and (iii) The
return of the share-asset ratio to its normal limits
within a reasonable time for the credit union
concerned is probable; and (iv) The probability of
a further potential loss to the insurance fund is
negligible. 12 CFR 700.2(e)(1)
37 The Vendor Registration Form can be accessed,
completed and submitted on NCUA’s Web site via
the following link: https://www.ncua.gov/about/
Documents/Procurement/VendorRegistration.pdf.
38 The CUSP Registration Form and Instructions
can be accessed on NCUA’s Web site at: https://
www.ncua.gov/Resources/OSCUI/Pages/
CUSP.aspx.
39 www.FCU-Charter-Application-Guide.
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The final IRPS permits a credit union
defined as small under the RFA to selfcertify that it meets the MDI definition
based solely on its knowledge of its
current membership and the community
it services (e.g., potential membership
identified in its charter), without any
supporting documentation. The Program
will have a significantly beneficial
economic impact on small entities
because it offers eligible credit unions,
including small entities, various forms
of technical assistance and educational
opportunities at no cost. NCUA
therefore certifies that the final IRPS
will not have a significant adverse
economic impact on a substantial
number of small credit unions.
Accordingly, no regulatory flexibility
analysis is required.
as an MDI, such as links to U.S. Census
and HDMA data.
Section II of this final IRPS addresses
these comments. In response, NCUA has
narrowed the scope of the minority
representation requirement among a
credit union’s management to its board
of directors, thus reducing the
paperwork burden of assessing minority
representation among senior
management officials. Also, NCUA has
displayed on the agency’s Web site links
to sources of data for self-certifying as
an MDI; thus reducing the burden on
potential MDIs to locate the Web sites
for assessing source information to
document their self-certification. NCUA
will apply to OMB for approval of the
final IRPS.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency creates a new paperwork
burden on regulated entities or modifies
an existing burden. For purposes of the
PRA, a paperwork burden may take the
form of either a reporting or a
recordkeeping requirement, each
referred to as an information collection.
The 2013 proposed IRPS identified a
new information collection consisting of
the procedure for a credit union to
document its self-certification of
eligibility to participate in the
Program.40
The proposed IRPS invited interested
persons to submit comments on the
prescribed information collection
requirement to the Office of
Management and Budget (OMB), with a
copy to NCUA, at the address provided
in the preamble to the proposed IRPS.
NCUA received the following comments
on the information collection
requirement prescribed in the proposed
IRPS, encouraging the agency to:
• Remove the minority representation
requirement among management
officials in the MDI definition;
• restrict the collection of data by any
method that allows members to
voluntarily identify themselves as a
minority;
• require the majority of a credit
union’s members’ deposits and/or loan
products to be held by racial minorities;
• conform the annual review and
update of the minority self-certification
to the updating frequency of the data
supporting a self-certification (e.g.,
every ten years if using U.S. Census
data); and
• provide a portal on NCUA’s Web
site for credit unions to access the
sources of data relevant to self-certifying
Executive Order 13132
40 78
FR 46374 (July 31, 2013)
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16:43 Jun 23, 2015
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. NCUA, an
independent regulatory agency as
defined in 44 U.S.C. 3502(5), voluntarily
complies with the Executive Order to
adhere to fundamental federalism
principles. This final IRPS will not have
a substantial direct effect on the states,
on the relationship between the national
government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. NCUA has
determined that this final IRPS does not
constitute a policy that has federalism
implications for purposes of the
executive order.
Treasury and General Government
Appropriations Act, 1999
NCUA has determined that this final
IRPS will not affect family well-being
within the meaning of Section 654 of
the Treasury and General Government
Appropriations Act, 1999, Public Law
105–277, 112 Stat. 2681 (1998).
Jkt 235001
The Board’s goal is to promulgate
clear and understandable regulations
that impose minimal regulatory burden.
We request your comments on whether
this final IRPS is understandable and
minimally intrusive if implemented as
proposed.
By the National Credit Union
Administration Board on June 18, 2015.
Gerard S. Poliquin,
Secretary of the Board.
[FR Doc. 2015–15515 Filed 6–23–15; 8:45 am]
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NATIONAL SCIENCE FOUNDATION
Committee Management; Notice of
Reestablishment
The Chief Operating Officer of the
National Science Foundation has
determined that the reestablishment of
the Proposal Review Panel for
International Science and Engineering is
necessary and in the public interest in
connection with the performance of the
duties imposed upon the National
Science Foundation (NSF) by 42 U.S.C.
1861 et seq. This determination follows
consultation with the Committee
Management Secretariat, General
Services Administration.
Name OF Committee: Proposal
Review Panel for International Science
and Engineering (#10749)
1. Nature/Purpose: The International
Science and Engineering proposal
review panel will advise the National
Science Foundation (NSF) on the merit
of proposals requesting financial
support of research and research-related
activities. The Committee will review
proposals submitted to NSF under the
purview of the Office of International
Science and Engineering Program
(OISE).
Responsible NSF Official: Rebecca
Keiser, Head, Office of International
Science and Engineering, National
Science Foundation, 4201 Wilson
Boulevard, Stafford II, Suite 1155,
Arlington, VA 22230. Telephone: 703/
292–8710
Dated: June 18, 2015.
Crystal Robinson,
Committee Management Officer.
[FR Doc. 2015–15421 Filed 6–23–15; 8:45 am]
BILLING CODE 7555–01–P
NATIONAL SCIENCE FOUNDATION
Agency Information Collection
Activities: Comment Request
National Science Foundation.
Submission for OMB review;
comment request.
AGENCY:
ACTION:
Agency Regulatory Goal
BILLING CODE 7535–01–P
36363
The National Science
Foundation (NSF) has submitted the
following information collection
requirement to OMB for review and
clearance under the Paperwork
Reduction Act of 1995, Public Law 104–
13 (44 U.S.C. 3501 et seq.). This is the
second notice for public comment; the
first was published in the Federal
Register at 79 FR 2014–18873 filed 11
August 2014, and no comments were
received. Comments regarding whether
the collection of information is
necessary for the proper performance of
SUMMARY:
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]]>Agencies
[Federal Register Volume 80, Number 121 (Wednesday, June 24, 2015)]
[Notices]
[Pages 36356-36363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15515]
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NATIONAL CREDIT UNION ADMINISTRATION
RIN 3133-AE16
Minority Depository Institution Preservation Program
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final Interpretive Ruling and Policy Statement 13-1.
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SUMMARY: The NCUA Board is issuing a final Interpretive Ruling and
Policy Statement to establish a Minority Depository Institution
Preservation Program for federally insured credit unions.
DATES: This final Interpretive Ruling and Policy Statement is effective
July 24, 2015.
FOR FURTHER INFORMATION CONTACT: Wendy A. Angus, Acting Director,
Office of Minority and Women Inclusion, at (703) 518-1650; or Cynthia
Vaughn, Diversity Outreach Program Analyst, Office of Minority and
Women Inclusion, at (703) 518-1650.
SUPPLEMENTARY INFORMATION:
I. Background
In 1989, Congress enacted the Financial Institutions Reform,
Recovery and Enforcement Act (FIRREA) \1\ in response to the failure of
the Federal Savings and Loan Insurance Corporation (FSLIC), which
insured the deposits of insolvent savings & loan institutions. Section
308 of FIRREA established goals for preserving and promoting minority
depository institutions.\2\ When enacted, FIRREA Sec. 308 applied only
to the Office of Thrift Supervision (OTS) and Federal Deposit Insurance
Corporation (FDIC), successor to FSLIC.\3\ Those agencies developed
various initiatives, such as training, technical assistance and
educational programs, aimed at preserving federally insured banks and
savings institutions that meet FIRREA's definition of a minority
depository institution (MDI).\4\
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\1\ Public Law 101-73, 103 Stat. 183 (Aug. 9, 1989).
\2\ Id. Title III, Sec. 308, 103 Stat. 353 note re ``Preserving
Minority Ownership of Minority Financial Institutions,'' 12 U.S.C.
1463 note.
\3\ Id. Sec. 1463 note (a). OCC and the Fed also initiated MDI
programs to comply with the spirit of FIRREA Sec. 308, even though
neither was originally required to do so. OTS became part of OCC on
July 21, 2011. OCC now administers the OTS MDI Program.
\4\ 12 U.S.C. 1463 note (b).
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In 2010, Congress enacted the Dodd Frank Wall Street Reform and
Consumer Protection Act (Dodd Frank Act).\5\ Section 367(4)(A) of the
Dodd Frank Act amended FIRREA Sec. 308 to require the National Credit
Union Administration (NCUA), the Office of the Comptroller of the
Currency (OCC) and the Board of Governors of the Federal Reserve System
(Fed) to take steps to preserve existing MDIs and encourage the
establishment of new ones.\6\ In addition, Dodd Frank Act Sec.
367(4)(B) requires these agencies, along with FDIC, to each submit an
annual report to Congress describing actions it has taken to carry out
FIRREA Sec. 308.\7\
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\5\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010); 12
U.S.C. 5301 et seq.
\6\ 12 U.S.C. 1463 note (a).
\7\ Id. Sec. 1463 note (c).
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In 2013, the NCUA Board proposed an Interpretive Ruling and Policy
Statement 13-1 (proposed IRPS) to establish a Minority Depository
Institution Preservation Program (Program) to encourage the
preservation of MDIs.\8\ As proposed, the MDI program would be
administered by NCUA's Office of Minority and Women Inclusion (OMWI)
and would consist of outreach efforts, various forms of technical
assistance and educational opportunities to benefit eligible credit
unions.
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\8\ 78 FR 46374 (July 31, 2013).
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[[Page 36357]]
NCUA received a total of nine comments on the proposed IRPS--eight
from credit union trade associations and one from a community advocacy
group. Seven commenters expressly supported the proposal; none opposed
it.
II. Summary of Comments on Proposed IRPS
1. ``Minority Depository Institution'' Definition
Three commenters recommended defining MDIs by minority
representation solely among current or potential members, without
considering minority representation among credit union management
officials. Two commenters believe extending the definition beyond
minority representation among the membership would exceed the statutory
mandate, and questioned whether including management officials within
the scope of minority representation is necessary or would undermine
the Program's goals. Another commenter opposed extending the minority
representation requirement to management officials, contending that, if
it were to encompass credit union staff, it would be burdensome for
nearly one-half of the nation's federally insured credit unions that
operate with five or fewer employees. This commenter also opposed
requiring minority representation among members of the board of
directors, supervisory and credit committee members because they are
volunteers elected from and by the membership, and who should have the
education, experience, and knowledge to manage a credit union
regardless of minority status.
In contrast, a commenter applauded NCUA for measuring minority
representation among these officials to ensure that credit union
leadership reflects the diversity of the communities and members an MDI
serves. In addition, the same commenter wanted to limit the MDI
definition to current members only, contending that having potential
members who reside in an area having a mostly minority population is no
assurance that an MDI would actually serve and invest in consumers of
color within that community. Finally, the commenter suggested that
minority representation should also encompass persons that identify as
multi-racial/multi-ethnic, estimated at 9 million Americans by the U.S.
Census Bureau.
In the final Interpretive Ruling and Policy Statement 13-1 (final
IRPS), the NCUA Board retains the proposed MDI definition with three
significant modifications to ensure complete conformity with the
statutory MDI definition of a mutual institution. Under that
definition, a credit union qualifies as an MDI when ``the majority of
the Board of Directors, account holders, and the community which it
services is predominantly minority.'' \9\ (Hereinafter, when minority
representation is required to be ``predominant'' or to consist of a
``majority,'' i.e., greater than 50 percent in either case, it will be
referred to as ``>50%'').
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\9\ 12 U.S.C. 1463 note (b)(1)(C).
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First, the proposed MDI definition combined both current and
``eligible potential'' credit union members to assess minority
representation among a credit union's ``account holders.'' Recognizing
that a potential member does not hold a credit union account nor enjoy
the rights and benefits of membership, the final IRPS limits to current
members the assessment of >50% minority representation among credit
union ``account holders.''
Second, as several commenters contended, the proposed MDI
definition assessed minority representation not only among a credit
union's board of directors (BOD) as required, but more generally among
its ``current management officials,'' consisting of members of the
supervisory and credit committees and of the senior executive
staff.\10\ Despite the NCUA Board's wish to emphasize the importance of
minority representation within the leadership ranks of MDIs, the final
IRPS limits to the BOD exclusively the assessment of >50% minority
representation, consistent with the letter of the applicable statutory
definition.
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\10\ E.g., Chief executive officer, assistant chief executive
officer, chief financial officer and branch managers. 78 FR 46374,
46375 (July 31, 2013)
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Third, the final IRPS clarifies that the MDI criterion requiring
the community of a would-be MDI to be ``predominantly minority'' is not
an alternative criterion for credit unions unable to meet the MDI
criteria requiring >50% minority representation within its membership
and on its BOD; it is an additional MDI criterion in and of itself.\11\
To assess whether the community of a would-be MDI is ``predominantly
minority,'' the final IRPS designates a credit union's community
according to its charter. To make this assessment, the final IRPS also
permits credit unions to rely on the same methods and supporting data
the proposed IRPS prescribed for use by credit unions to self-certify
as an MDI (e.g., U.S. Census and Home Mortgage Disclosure Act
data).\12\
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\11\ 12 U.S.C. 1463 note (b)(1)(C). In contrast to NCUA, the
fact that FDIC oversees publicly-owned, privately-owned and mutual
institutions may account for its policy permitting an institution
that is unable to meet the 51 percent minority ownership criterion
to instead rely on two of the mutual MDI >50% criteria, yielding a
hybrid definition: ``In addition to the institutions that meet the
[51 percent] ownership test, for purposes of this Policy Statement,
institutions will be considered [MDIs] if a majority of the [BOD] is
minority and the community that the institution serves is
predominantly minority.'' 67 FR 18 618, 18620 (April 16, 2002). See
also 67 FR 77, 79 (January 2, 2002).
\12\ 78 FR at 46376 and n. 14. In many cases the methods and
data that establish >50% minority representation among a credit
union's membership also will establish >50% minority representation
within the community it services. The Board acknowledges this
redundancy as necessary to conform this third criterion to the
letter of the statutory MDI definition.
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In addition to the above modifications, the MDI definition in the
final IRPS counts a person of multiple ethnicities who falls into at
least one of the four minority categories designated by law,\13\ (or is
multi-racial as defined in Table 1) as a single minority individual for
purposes of minority representation.
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\13\ 12 U.S.C. 1463 note (b)(2).
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2. Documentation To Support MDI Designation
In order to receive the MDI designation, one commenter advocated
requiring the majority of a credit union's members' deposits and/or
loan products to be held by racial minorities. While striving to
maximize flexibility and the options to determine and support an MDI
designation, the NCUA Board is concerned that it would be too
burdensome and restrictive to identify the race and/or ethnicity of all
members with deposits and/or loan products. The final IRPS therefore
does not adopt this suggestion as an MDI criterion.
One commenter recommended that NCUA clarify which U.S. Census
demographic data to rely upon to measure minority representation among
members for purposes of MDI determination. The final IRPS clarifies
that U.S. Census data includes the American Fact Finder's most recent
census population data (e.g., 2010) for a particular geographic area,
such as within members' zip codes or census tracts; and that minority
composition \14\ by census tracts, according to U.S. Census population
data, can be found on the U.S. Census Bureau and the Federal Financial
Institutions Examination Council (FFIEC) Web sites.
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\14\ The minority composition represents the percentage of
minorities divided by the entire referred population (e.g., total
membership or within a geographic area such as a census tract or a
Metropolitan Statistical Area).
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One commenter suggested providing a portal on NCUA's Web site for
credit unions to access the sources of data relevant to self-certifying
as an MDI,
[[Page 36358]]
such as links to U.S. Census and Home Mortgage Disclosure Act (HMDA)
data. NCUA currently provides links to access U.S. Census and FFIEC
data on OMWI's Web page. To identify the ethnicity of its mortgage
applicants, a credit union may rely on the home mortgage data it
submits to comply with HMDA.
One commenter opposed the notion of collecting data by any method
that relies on members voluntarily identifying themselves as a
minority, for two reasons. First, the practice may conflict with anti-
discrimination laws; and second, maintaining the collected ethnicity
data may expose credit unions to criticism that the practice is
intrusive, and to the risk of legal action. The final IRPS permits
collection of volunteered ethnicity data as an option, but not a
requirement, for credit unions to determine and to support self-
certification of MDI eligibility. Organizations that already collect
volunteered ethnicity data from customers and members must take care to
maintain the confidentiality of the collected data. Credit unions that
elect this option to support self-certification should maintain the
collected data separately from members' personal account files, and
without personal identifiers (e.g., name, account or social security
number, etc.).
One commenter disagreed with the proposed requirement to annually
review and update credit unions' MDI status, suggesting that NCUA
require credit unions to follow a data review schedule that is
consistent with the data each credit union relied upon to document its
MDI certification. For example, when MDI eligibility is based on U.S.
Census population data, the review and update would occur every 10
years. Due to frequent changes in a credit union's field of membership,
and the composition of its board of directors due to annual elections,
the final IRPS retains an annual schedule for the review and update of
MDI self-certifications.
3. MDI Program Costs, Resources & Funding
Three commenters asked NCUA to perform a cost/benefit analysis of
the new Program, detailing the new resources or processes that will be
essential to realize NCUA's commitment to preserve MDIs, and how the
Program will be funded. Another commenter sought further explanation of
Program mechanics, funding details, the number of staff dedicated to
Program implementation, the geographic distribution of Program
beneficiaries, and the frequency of OMWI staff interaction with
participating MDIs.
The NCUA Board anticipates no additional costs or new resources
attributable to the Program, due to reliance on existing agency
programs and resources offered through NCUA's Office of Small Credit
Union Initiatives (OSCUI), regional offices, and Office of Consumer
Protection (OCP), thus avoiding overlaps with existing supervision,
chartering, training, technical assistance, and educational programs.
About 92 percent of MDIs already are eligible for OSCUI services that
assist and educate credit unions designated either as low-income or as
small. Examiners provide additional guidance to MDIs in between
examinations to assist them in resolving substantial examination or
viability concerns. OCP provides guidance to assist and educate MDIs
and interested minority groups in chartering and in field of membership
expansions. One OMWI staff member is responsible for managing the
Program. OMWI's initial interaction and communications with MDIs will
include OMWI's participation at events attended by MDIs, and OMWI's
assistance provided upon request from MDIs.
4. MDI Program Benefits
One commenter favored an expansion of financial support to enable
the Program to provide direct financial support to MDIs. Financial
support to eligible MDIs will be offered through the existing grant and
loan programs funded by NCUA's Community Development Revolving Loan
Fund (CDRLF).
Two commenters encouraged NCUA to provide technical assistance to
MDIs to avoid insolvency. One suggested two ways to strengthen the net
worth of MDIs in response to unusual losses related to economic
conditions outside the credit union's control: (1) Develop criteria and
goals for access to assistance under section 208 of the Federal Credit
Union Act (Sec. 208 assistance); \15\ and (2) make CDRLF funding a
source of secondary capital for low-income designated credit unions,
especially MDIs.
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\15\ 12 U.S.C. 1788(a). See also 12 U.S.C. 1790d(o)(2)(B).
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The NCUA Board emphasizes that the agency's role in preserving MDIs
and providing technical support not only is to help MDIs survive, but
to help them thrive as ongoing concerns. Section 208 assistance is
available to all credit unions under at least one of three conditions:
(1) To assist in the voluntary liquidation of a solvent credit union;
(2) to avert the liquidation of a credit union that NCUA determines is
in danger of insolvency; or (3) when NCUA determines it is needed to
reduce the risk, or avert the threat, of a loss to the National Credit
Union Share Insurance Fund.\16\
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\16\ 12 U.S.C. 1788(a)(1)-(2).
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NCUA typically provides Sec. 208 assistance to facilitate a sound
merger or consolidation of an insured credit union in order to avert
the liquidation of a credit union. Other than to avert the liquidation
of a credit union that NCUA determines on a case-by-case basis is in
danger of insolvency, regardless whether it is an MDI, Sec. 208
assistance is not used solely to improve a credit union's capital
position. The NCUA Board reserves the use of Sec. 208 assistance for
credit unions under the above three conditions. However, the agency
plans to enhance its guidance to examiners to sensitize them about the
availability of Sec. 208 assistance for MDIs, as well as about the
``General Preference Guidelines'' for mergers, addressed below. In
contrast, the purpose of CDRLF grants and loans is to support enhanced
service to underserved communities, including those served by MDIs.
Unlike Sec. 208 assistance, CDRLF grants and loans generally are not
provided solely for the purpose of improving capital to avoid
insolvency.
One commenter suggested making technical assistance and educational
programs available on a variety of topics critical to preserving MDIs,
including aid in achieving satisfactory levels of operations and
regulatory performance. OSCUI currently provides technical guidance and
educational programs to assist MDIs, as well as small credit unions, in
achieving these objectives regardless of low-income designation and
asset size. These programs include NCUA-sponsored videos, webinars,
consulting services, newsletters, and other publications, including a
Credit Union Leadership Resource Manual.
One commenter advocated adopting a plan that combines targeted
resources with supervisory authority in an effort to resolve material
safety and soundness concerns among troubled MDIs. NCUA has no plans to
make MDI preservation a part of the examination and/or supervision
processes, although examiners are encouraged to provide additional
guidance to MDIs in resolving material safety and soundness concerns
whenever feasible. Also, OSCUI will continue to provide MDIs with
technical assistance and educational and consulting services to assist
them in resolving these concerns, thus improving their viability. OMWI
will aid MDIs by facilitating and monitoring the assistance they
receive, will report to Congress annually on
[[Page 36359]]
these efforts to preserve MDIs and to create new MDIs, and will
reevaluate and enhance the Program as it matures.
5. MDI Program Partnerships
Two commenters suggested collaborating with interested stakeholders
(e.g., trade associations) to increase the likelihood of preserving
MDIs, as well as to participate with NCUA's OMWI as a resource partner.
One of the two commenters advocated expanding the Program's outreach to
include a webinar on the application process for would-be MDIs,
workshop sessions at trade conferences, and a comprehensive marketing
program to increase awareness. NCUA's Office of Consumer Protection
(OCP) recently published the Federal Credit Union Charter Application
Guide, which provides detailed step-by-step instructions for chartering
a new federal credit union. Additionally, NCUA is building
relationships and plans to collaborate with credit union trade
associations, credit unions, and other organizations to provide
mentoring and educational opportunities for MDIs, including workshops
and webinars. Interested organizations and credit unions should contact
OMWI and suggest ideas for possible partnerships.
One commenter encouraged NCUA's OMWI to collaborate with the
original FIRREA-designated agencies, and the two agencies that joined
them, to implement their ideas and suggestions. To develop and enhance
NCUA's Program, OMWI continues to consult with its counterparts at the
FDIC, the OCC and the Fed, to review their MDI programs, and to attend
their interagency MDI and Community Development Financial Institution
Banks' Conferences. NCUA will continue to work with its counterparts,
whenever feasible, to obtain additional ideas to enhance its Program.
6. General Preference Guidelines for MDI Mergers
One commenter supported the FIRREA-prescribed ``General Preference
Guidelines'' for mergers (Guidelines),\17\ which give MDIs preference
as a merger partner, provided that other relevant factors are given
appropriate weight and consideration (e.g., the acquiring MDI's
capacity to offer the same and/or improved financial services and
access to the acquired members).
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\17\ 12 U.S.C. 1463 note (a)(2).
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To implement the Program, another commenter encouraged NCUA to work
closely with state regulators to apply the Guidelines seamlessly and
fairly when comparing potential MDI versus non-MDI merger partners for
a troubled state-chartered credit union; to make the Program respond
expeditiously and effectively to a troubled institution; and to ensure
that supervisory oversight remains the focus of the Program--all
without delaying the resolution of a troubled institution through
merger or acquisition.
Under the final IRPS, NCUA regional offices will continue to
process the mergers of troubled MDIs, working closely with state
regulators to apply the Guidelines, and to ensure that the Guidelines
do not conflict with safety and soundness considerations. In processing
MDI mergers and purchase-and-assumption transactions, the need to
respond expeditiously and effectively to troubled MDIs will continue to
be the primary focus of NCUA's supervisory oversight. The Guidelines
provide interested MDIs an opportunity to participate in the merger
bidding process for an insolvent or troubled MDI, enabling the minority
character of the MDI to be preserved.
7. Attention to Troubled MDIs
One commenter recommended establishing a clear supervisory
framework and strategy to establish a sufficient period of time to
permit a more aggressive workout strategy for troubled MDIs. The
commenter contended that such a framework and strategy would be an
important preservation step between the identification of a troubled
credit union and its dissolution. The commenter suggested addressing
steps that may be taken through NCUA's supervisory examinations and
oversight; and recommending an aggressive strategy for intervention
using supervisory authorities combined with its targeted workout teams
and resources.
In addition, this commenter advocated adopting a system of triage
for prioritizing attention to MDIs, based on financial health, to best
support those that are financially sound in building and expanding
their work, while intervening sooner with those on a less secure
footing in order to preserve service to their communities. Furthermore,
this commenter advocated adopting a plan to provide resources and
support to struggling MDIs identified as in danger of failing either
through agency enforcement action or an inability to address issues
identified in a Document of Resolution (DOR) and/or Letter of
Understanding and Agreement (LUA). The period between a DOR and an LUA
may present a critical moment where additional help and support can be
sought. This commenter suggested steps NCUA could implement to work an
MDI out of distress or troubled status. The commenter suggested using
NCUA's Vendor Registration process to identify an appropriate resource
team to participate in workout situations and to put additional
resources and technical assistance at its disposal in working to
resolve sound operations in a troubled MDI. The commenter envisioned
the resource team effecting a significant turnaround in 6-12 months
with the intention of preserving and building the institution. If the
situation is not viable, the commenter suggested the resource team
would be able to assist in identifying appropriate merger partners
interested in serving the minority community.
NCUA cannot adopt the commenter's suggestions regarding attention
to troubled MDIs because they would involve internal agency processes
beyond the scope of this final IRPS. The final IPRS is a policy
statement that generally prescribes actions to preserve MDIs, such as
technical assistance, training, and educational opportunities to
strengthen management and/or operations, as well as to assist in
resolving examination and compliance concerns. The Program will not
interfere with supervisory enforcement actions duly undertaken by the
other offices within the agency.
Also, due to confidentiality, NCUA cannot disclose information
about troubled MDIs to resource teams involving third parties (e.g.,
trade associations or vendors). Credit union examination results
constitute confidential information; public disclosure is prohibited by
law. NCUA regulations specifically prohibit the release of such
information by officers, employees or agents of NCUA or any federally
insured credit union.\18\ Such disclosure risks harming the financial
stability of credit unions or interfering in the relationship between
NCUA and credit unions.
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\18\ 12 CFR 792.11(a)(8),
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The final IRPS addresses the posting of a list of MDIs on the
agency's Web site (www.ncua.gov) and the use of a Vendor Registration
Form to provide an opportunity for qualified minorities or minority-
owned firms to apply for the position of interim manager of an MDI
placed in conservatorship. Other uses of the form may be considered.
With the posting of an MDI list on the agency Web site, interested
parties (e.g., trade associations or vendors) may monitor the financial
trends of all MDIs to identify troubled MDIs and offer a program to
restore them to financial soundness.
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8. Commenters' Other Suggestions
Rather than holding to a static number of MDIs to measure
preservation, one commenter advocated chartering new MDIs in
communities that would benefit from MDI service. NCUA's goals are to
implement efforts not only to preserve existing MDIs, but to encourage
the chartering of new MDIs, as FIRREA Sec. 308(a) (1)-(5)
prescribes.\19\ NCUA's OCP and OSCUI will continue to work with groups
seeking to charter new MDIs and with MDIs seeking a common bond
conversion or a charter expansion, and they will assist them in the
application process.
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\19\ 12 U.S.C. 1463 note (a)(1)-(5).
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One commenter advocated publicizing information to credit unions,
leagues and state agencies about NCUA's efforts to preserve MDIs and
about the Program's benefits. Information pertaining to MDI
preservation efforts is provided in NCUA's annual reports to
Congress.\20\ NCUA's MDI Reports to Congress for 2013 and 2014 are
available on OMWI's Web page.\21\
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\20\ Id. Sec. 1463 note (c).
\21\ Available at: https://www.ncua.gov/Legal/RptsPlans/Pages/OMWI.aspx.
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Another commenter suggested limiting the regulatory burden on
credit unions as a step in support of the survival of MDIs. The NCUA
Board agrees with this recommendation, and is aggressively working
toward this goal. In January 2013, the NCUA Board reviewed the
threshold it uses to identify which credit unions qualify as small
entities and thus receive special consideration regarding regulatory
burden and alternatives under the Regulatory Flexibility Act
(``RFA'').\22\ Based on industry percentages carried forward from the
last update in 2003, and corresponding risks to the Share Insurance
Fund, the NCUA Board determined that credit unions with less than $50
million in assets, up from the prior $10 million threshold, were small
and non-complex for purposes of the RFA.\23\ These credit unions
receive exemptions from certain NCUA rules, and heightened
consideration of regulatory burden. Approximately 82 percent of the 655
self-identified MDIs under the proposed definition had assets of less
than $50 million as of March 31, 2015. In February of 2015, the NCUA
Board proposed increasing the asset threshold to define small credit
unions under the RFA to $100 million.\24\ The proposed rule is intended
to provide regulatory relief for a greater percentage of credit unions
(including MDIs) in future rulemakings. Approximately 89 percent of the
655 self-identified MDIs under the proposed definition had assets of
less than $100 million as of March 31, 2015.
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\22\ 5 U.S.C. 601.
\23\ 78 FR 4032 (January 18, 2013).
\24\ 80 FR 11954 (March 15, 2015).
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One commenter proposed that NCUA establish an advisory committee to
assist in developing, designing, and testing strategies and approaches
on how to best preserve MDIs. Rather than rely on a permanent advisory
committee, NCUA may consider informal focus groups comprised of MDIs of
all asset sizes and levels of complexity to accomplish the suggested
goals.
Revised as explained above, the final IRPS follows.
III. Final Interpretive Ruling and Policy Statement 13-1 (Final IRPS)
1. Why is the NCUA Board issuing this final IRPS?
The NCUA Board is issuing this final IRPS to establish a Minority
Depository Institution Preservation Program (Program) to achieve the
goals of preserving and encouraging Minority Depository Institutions
(MDIs), as section 308 of the Financial Institutions Reform, Recovery
and Enforcement Act (FIRREA Sec. 308) directs.\25\ Recognizing the
important role of MDIs in minority communities, the NCUA Board
envisions a program of proactive steps and outreach efforts to promote
and preserve minority ownership in the credit union system. To achieve
these goals, the final IRPS prescribes the Program eligibility criteria
and Program elements.
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\25\ Public Law 101-73, 103 Stat. 183 (Aug. 9, 1989).
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2. What are the goals and objectives of the MDI Program?
The Program embraces goals and objectives that relate to NCUA's
mission and goal to ensure a safe, sound, and sustainable credit union
system as envisioned in NCUA's current strategic plan.
The Program also reflects the preservation goals of FIRREA Sec.
308,\26\ namely:
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\26\ 12 U.S.C. 1463 note (a) & (c).
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To preserve the present number of MDIs;
To preserve the minority character of MDIs that are
involuntarily merged, or are acquired, by following the prescribed
``general preference guidelines'' to identify a merger or acquisition
partner; \27\
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\27\ In priority, the General Preference Guidelines for
identifying an involuntary merger/acquisition partner are: (a) Same
type of MDI in the same city; (b) Same type of MDI in the same
state; (c) Same type of MDI nationwide; (d) Any type of MDI in the
same city; (e) Any type of MDI in the same state; (f) Any type of
MDI nationwide; and (g) Any other bidders (for merger/acquisition
partners). 12 U.S.C. 1463 note (a)(2). Rules concerning field of
membership, least cost to NCUSIF, and safety and soundness still
apply to all mergers. Regional office staff will continue to process
mergers and work with management and state regulators. OMWI will
monitor MDI mergers and report about them to Congress annually.
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To provide technical assistance to prevent insolvency of
MDIs that are not now insolvent;
To promote and encourage the creation of new MDIs; and
To provide for training, technical assistance, and
educational programs.
3. Who is eligible to participate in the MDI Program?
A credit union that meets the definition of an MDI is eligible to
participate in the Program. The Program adopts the MDI definition set
forth in FIRREA Sec. 308 that applies to a mutual institution.\28\
Accordingly, this final IRPS defines an MDI as a federally insured
credit union in which a majority of its current members, a majority of
its board of directors (BOD), and a majority of the community it
services, as designated in its charter, falls within any of the
eligible minority groups described below. (Hereinafter, when minority
representation is required to be ``predominant'' or to consist of a
``majority,'' i.e., greater than 50 percent in either case, it will be
referred to as ``>50%''.)
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\28\ 12 U.S.C. 1463 note (b)(1)(C).
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NCUA relies on FIRREA Sec. 308's ``minority'' definition to
identify an eligible minority exclusively as any Black American, Asian
American, Hispanic American, or Native American.\29\ Also, for the
purpose of minority representation under the MDI definition, anyone of
multiple ethnicities who falls into more than one of the minority
categories depicted below is a single minority individual.
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\29\ Id. Sec. 1463 note (b)(2). Compare 12 U.S.C. 5452(g)(3)
incorporating 12 U.S.C. 1811 note(c)(3).
[[Page 36361]]
Table 1--Minority Category Definitions
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Equal Employment
Minority category Opportunity Commission
(EEOC)
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Black American............................... Black or African American
(Not Hispanic or
Latino)--A person having
origins in any of the
black racial groups of
Africa.
Native American.............................. American Indian or Alaska
Native (Not Hispanic or
Latino)--A person having
origins in any of the
original peoples of
North and South America
(including Central
America), and who
maintain tribal
affiliation or community
attachment.
Hispanic American............................ Hispanic or Latino--A
person of Cuban,
Mexican, Puerto Rican,
South or Central
American, or other
Spanish culture or
origin regardless of
race.
Asian American............................... Asian (Not Hispanic or
Latino)--A person having
origins in any of the
original peoples of the
Far East, Southeast
Asia, or the Indian
Subcontinent, including,
for example, Cambodia,
China, India, Japan,
Korea, Malaysia,
Pakistan, the Philippine
Islands, Thailand, and
Vietnam; or
Native Hawaiian or Other
Pacific Islander (Not
Hispanic or Latino)--A
person having origins in
any of the peoples of
Hawaii, Guam, Samoa, or
other Pacific Islands.
Multi-Racial American........................ Two or More Races \30\
(Not Hispanic or
Latino)--A person who
identifies with more
than one of the above
races.
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4. How will the MDI Program function?
NCUA's Office of Minority and Women Inclusion (OMWI) administers
the Program. A federally insured credit union can self-certify as an
MDI by affirmatively answering the following questions within NCUA's
Credit Union Online Profile (CU Online System), accessible from the
NCUA Web site,\31\ or when submitting a Call Report: (1) Are more than
50 percent of your credit union's current and eligible potential
members Black American, Native American, Hispanic American or Asian
American?; \32\ and (2) Is more than 50 percent of your credit union's
current board of directors Black American, Native American, Hispanic
American or Asian American?
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\30\ U.S. Equal Employment Opportunity Commission's EEO-1
Report-Race/Ethnicity Categories.
\31\ www.ncua.gov.
\32\ The community serviced by a multiple common bond credit
union consists of both its current members and the eligible non-
members within the select groups designated by its charter. For
example, the current members and eligible non-members may all reside
in one city, county, or MSA. The community serviced by a community
credit union consists of both its current members and the eligible
non-members who reside within the well-defined local community
designated by its charter.
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If both questions are answered ``yes'', the credit union may self-
certify via NCUA's Credit Union Online Profile system that it meets the
>50% minority criteria, as the case may be. A credit union defined as a
small entity under the Regulatory Flexibility Act (RFA) may self-
certify >50% representation among its current members, and within the
community it services (current and potential members combined), based
solely on knowledge of those members. A credit union not defined as a
small entity under the RFA may rely on one of the following methods, as
applicable, to determine the minority composition of its current
membership exclusively, and of the community it services, consisting of
the combined current and potential membership:
(A) Ascertain the minority representation using demographic data
from the U.S. Census Bureau (using the U.S. Census Bureau or FFIEC Web
site) based on the area(s) where the combined current and potential
membership resides, such as a township, borough, city, county, or
Metropolitan Statistical Area (MSA). If the U.S. Census data (e.g.,
census tracts, zip codes, townships, boroughs, cities, counties, etc.)
shows that the area's population is comprised mostly of eligible
minorities, the credit union may assume that its current membership and
the community it services both have the same minority composition as
the U.S. Census data indicates.
(B) Use Home Mortgage Disclosure Act (HMDA) data to calculate the
reported number of minority mortgage applicants divided by the total
number of mortgage applicants within the credit union's membership.
HMDA data can be obtained from the FFIEC Web site. If the share of
minority representation among applicants is >50%, the minority
membership and the predominantly community criteria may be met. If a
credit union grants a majority of its mortgage loans to minorities, it
is most likely the majority of the community the credit union services
(its current and potential members) will consist of minorities.
(C) Elect to collect data from members who voluntarily choose to
self-identify as an eligible minority and use the data to determine
minority representation among the credit union's membership. The credit
union may wish to consider using an unbiased third party to conduct
such a collection process. For example, data can be collected through a
survey of members assessing the services they desire, or by mailed
electoral ballots for official positions. Once collected, it is
essential to maintain the confidentiality of the data; it should not be
retained in the members' file or with any personal identifiers (e.g.,
name, account or social security numbers, etc.) If a majority of its
current members are minorities, it is most likely the majority of the
community the credit union services (its current and potential members)
will consist of minorities.
(D) Use any other reasonable form of data, such as membership
address list analyses, or an employer's demographic analysis of
employees.
A credit union defined as a small entity under the RFA that self-
identifies as an MDI should maintain some form of the documentation
that it relied upon to determine that, as explained above, it meets the
minimum minority representation among its membership. This
documentation may consist of demographic data obtained from the U.S.
Census Bureau,\33\ from a credit union's HMDA report, or from any other
reasonable source and form of data (e.g., member survey, sponsor's
employee demographic or members' zip code analysis).
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\33\ www.census.gov or www.FFIEC.gov.
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Regardless of asset size and the method a credit union uses to
self-certify as an MDI, the validity of the self-certification (and the
supporting data) is subject to verification by NCUA based on minority
representation where the credit union's members reside.
If NCUA questions a credit union's certification or the data
supporting it (e.g., members' addresses) is found to be at odds with a
credit union's self-certification of >50% minority representation among
either its current membership, the community it services (consisting of
current and potential
[[Page 36362]]
members) or its board of directors, NCUA's OWMI will:
(1) Notify the credit union in writing about its reasons for
invalidating the certification.
(2) Provide the credit union an opportunity to submit documentation
and/or a rationale to support its MDI self-identification within 60
days of receiving OMWI's notification.
(3) Review the documentation and/or rationale the credit union
submits and inform the credit union whether, as a result, it meets the
>50% minority criterion.
(4) Deny the MDI designation if the credit union either provides no
documentation and/or rationale, or provides documentation and/or
rationale that, in NCUA's discretion, is insufficient to support a
certification based upon >50% minority representation under all
criteria.
NCUA will periodically review and determine whether an MDI
continues to meet the MDI definition. A credit union may no longer meet
the MDI definition as a result of FOM expansions (e.g., mergers,
purchase and assumptions, new groups added to the FOM, or charter
conversions) and changes resulting from board of directors elections.
NCUA, at its discretion, may continue to treat a credit union as an MDI
under this final IRPS in the event its board of directors no longer
meets the minority criteria, provided there is >50% minority
representation among both the credit union's current members and the
community it serves.
Once it qualifies as an MDI, a credit union should annually assess
whether it continues to meet the MDI definition (e.g., December 31st
Call Report cycle), and update its status on NCUA's Credit Union Online
Profile system as necessary.
Participation in the MDI Program is voluntary. An MDI may
discontinue its participation at any time by updating its status on
NCUA's Credit Union Online system. In that event, the credit union
would no longer be eligible to participate in any MDI Program
initiatives (e.g., MDI merger/acquisition preference consideration or
MDI partnerships).
5. What are the elements of the MDI Program?
NCUA seeks to provide MDI Program participants a variety of
initiatives to assist in preserving the economic viability of their
institutions. The initiatives include technical assistance and
educational opportunities for MDIs through NCUA's Office of Small
Credit Union Initiatives (OSCUI).\34\ This technical assistance may
include participation in:
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\34\ OSCUI's services are generally offered to credit unions
that have less than $50 million in assets or are low-income
designated. By statute, grants and loans from the CDRLF are
available only to low-income designated credit unions. The webinars
and training programs are open to all credit unions. The MDI Program
expands consulting services to all MDIs.
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(1) OSCUI's Consulting Program;
(2) NCUA-sponsored training, webinars, etc.; and
(3) Grant or loan programs of NCUA's Community Development
Revolving Loan Fund (CDRLF).
The technical assistance may also include examiner guidance in
resolving examination concerns; in locating new sponsors, mentors, or
merger partners; in expanding the field of membership; and in setting
up new programs and services. Additionally, the NCUA Board will
consider providing Section 208 assistance to avert the liquidation of a
credit union that it determines on a case-by-case basis is in danger of
insolvency, regardless whether the credit union is an MDI.\35\
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\35\ 12 U.S.C. 1788(a)(1)-(2).
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NCUA may aid in coordinating partnerships between MDIs and other
organizations (e.g., other MDIs, and/or trade associations) as a means
of providing technical or operational assistance to MDIs. This
assistance may include training for officials and staff, expertise in
technical areas (e.g., marketing, FOM expansion guidance, bidding on
merger proposals), equipment, and assistance for specific projects or
to achieve specific goals.
NCUA will publish a list of federally insured MDIs on its Web site
(www.ncua.gov) to enable organizations (e.g., banks, other MDIs, trade
associations or other third parties) to identify MDIs that would
benefit from partnering, mentoring, additional resources, and/or
business relationships. Banks can obtain Community Reinvestment Act
(CRA) credit for investing in MDIs. For example, if a bank were to have
an unused building, the bank could lease that space to an MDI at no
charge or at a low cost, and receive a corresponding CRA credit.
NCUA will monitor MDIs and will report to Congress annually on the
number and overall financial condition of MDIs, along with actions
taken by the agency to preserve and strengthen them and to encourage
the chartering of new ones.
NCUA will use FIRREA's prescribed General Preference Guidelines
(see Sec. II.6. above) to attempt to preserve the minority character
of failing MDIs that are involuntarily merged or acquired. In the event
of an involuntary merger/acquisition of a troubled MDI,\36\ NCUA will
invite bids from MDIs that are qualified to partner with a failing MDI,
along with non-MDI credit unions. OMWI also will assist in locating an
MDI partner for MDIs wishing to voluntarily merge their operations. To
be considered as an acquirer, an MDI is strongly encouraged to document
its desire to acquire another MDI by registering itself on NCUA's
Merger Registry via the CU Online System.
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\36\ A merger is involuntary whenever the credit union is
insolvent. 12 U.S.C. 1787(a) (1). A credit union is insolvent when
the total amount of the credit union's shares exceeds the present
cash value of its assets after providing for liabilities unless: (i)
It is determined by the NCUA Board that the facts that caused the
deficient share-asset ratio no longer exist; and (ii) The likelihood
of further depreciation of the share asset ratio is not probable;
and (iii) The return of the share-asset ratio to its normal limits
within a reasonable time for the credit union concerned is probable;
and (iv) The probability of a further potential loss to the
insurance fund is negligible. 12 CFR 700.2(e)(1)
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Additionally, any organization or person seeking to be a candidate
for managing the conservatorship of an MDI should complete an NCUA
Vendor Registration Form (NCUA 1772) \37\ and OSCUI's Credit Union
Service Provider (CUSP) Database Registration Form.\38\ OMWI can
provide NCUA regional offices with a list of diverse candidates who
have requested consideration for the position of interim Chief
Executive Officer/Manager of a conserved MDI, upon request.
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\37\ The Vendor Registration Form can be accessed, completed and
submitted on NCUA's Web site via the following link: https://www.ncua.gov/about/Documents/Procurement/VendorRegistration.pdf.
\38\ The CUSP Registration Form and Instructions can be accessed
on NCUA's Web site at: https://www.ncua.gov/Resources/OSCUI/Pages/CUSP.aspx.
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Finally, the Office of Consumer Protection and OSCUI will be
available to provide assistance, and guidance in the application
process, to groups that may be interested in chartering a new MDI, and
to MDIs wishing to apply to change their charter or field of
membership. For detailed step-by-step instructions on chartering a
federal credit union, please refer to the Federal Credit Union Charter
Application Guide.\39\
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\39\ www.FCU-Charter-Application-Guide.
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IV. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires NCUA to prepare an
analysis to describe any significant economic impact the IRPS may have
on a substantial number of small entities.
[[Page 36363]]
The final IRPS permits a credit union defined as small under the RFA to
self-certify that it meets the MDI definition based solely on its
knowledge of its current membership and the community it services
(e.g., potential membership identified in its charter), without any
supporting documentation. The Program will have a significantly
beneficial economic impact on small entities because it offers eligible
credit unions, including small entities, various forms of technical
assistance and educational opportunities at no cost. NCUA therefore
certifies that the final IRPS will not have a significant adverse
economic impact on a substantial number of small credit unions.
Accordingly, no regulatory flexibility analysis is required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new paperwork burden on regulated entities or
modifies an existing burden. For purposes of the PRA, a paperwork
burden may take the form of either a reporting or a recordkeeping
requirement, each referred to as an information collection. The 2013
proposed IRPS identified a new information collection consisting of the
procedure for a credit union to document its self-certification of
eligibility to participate in the Program.\40\
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\40\ 78 FR 46374 (July 31, 2013)
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The proposed IRPS invited interested persons to submit comments on
the prescribed information collection requirement to the Office of
Management and Budget (OMB), with a copy to NCUA, at the address
provided in the preamble to the proposed IRPS. NCUA received the
following comments on the information collection requirement prescribed
in the proposed IRPS, encouraging the agency to:
Remove the minority representation requirement among
management officials in the MDI definition;
restrict the collection of data by any method that allows
members to voluntarily identify themselves as a minority;
require the majority of a credit union's members' deposits
and/or loan products to be held by racial minorities;
conform the annual review and update of the minority self-
certification to the updating frequency of the data supporting a self-
certification (e.g., every ten years if using U.S. Census data); and
provide a portal on NCUA's Web site for credit unions to
access the sources of data relevant to self-certifying as an MDI, such
as links to U.S. Census and HDMA data.
Section II of this final IRPS addresses these comments. In
response, NCUA has narrowed the scope of the minority representation
requirement among a credit union's management to its board of
directors, thus reducing the paperwork burden of assessing minority
representation among senior management officials. Also, NCUA has
displayed on the agency's Web site links to sources of data for self-
certifying as an MDI; thus reducing the burden on potential MDIs to
locate the Web sites for assessing source information to document their
self-certification. NCUA will apply to OMB for approval of the final
IRPS.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests.
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the Executive Order to adhere to fundamental
federalism principles. This final IRPS will not have a substantial
direct effect on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this final IRPS does not constitute a policy that has
federalism implications for purposes of the executive order.
Treasury and General Government Appropriations Act, 1999
NCUA has determined that this final IRPS will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
Agency Regulatory Goal
The Board's goal is to promulgate clear and understandable
regulations that impose minimal regulatory burden. We request your
comments on whether this final IRPS is understandable and minimally
intrusive if implemented as proposed.
By the National Credit Union Administration Board on June 18,
2015.
Gerard S. Poliquin,
Secretary of the Board.
[FR Doc. 2015-15515 Filed 6-23-15; 8:45 am]
BILLING CODE 7535-01-P
